The House legislation will reduce the Auto-Zero-EFC threshold from
$31,000 to $15,000. Students with a zero EFC get a full Pell
Grant. This change will significantly reduce the number of low-income
students who receive the maximum Pell Grant. Some students will
experience a reduction of as much as $2,700 in their Pell Grant
funding.

The House legislation will restore all of the untaxed income and
benefit categories that were removed by the College Cost Reduction and
Access Act of 2007 (P.L. 110-84). Accordingly, the House legislation
will count the additional child tax credit, welfare benefits, earned
income tax credit (EITC), federal tax credit on special fuels, foreign
income exclusion and untaxed social security benefits as part of the
definition of untaxed income. This change will increase the length of
the FAFSA by about 6 questions.

The House legislation significantly also reduces the income protection
allowance for 2012-13 and subsequent years. In effect, the legislation
rolls back the income protection allowance to 2008-09 levels adjusted
for inflation. For example, current law provides for an income
protection allowance of $6,000 for dependent undergraduate students in
2012-13. The House legislation will reduce it to $3,290, reflecting
only an inflationary adjustment from the $3,080 level in
2008-09. Similarly, the House legislation will reduce the income
protection allowance from $9,300 (single) and $14,960 (married) to
$6,620 (single) and $10,620 (married), reflecting only an inflationary
adjustment from the $6,220 (single) and $9,970 (married) levels in
2008-09.

The Senate legislation does not modify the federal need analysis formula.

Other Student Aid Funding Changes

Both the House and Senate versions of the legislation leave the
budgets for the Federal SEOG Grant and Federal Work-Study programs
unchanged.

The House legislation eliminates funding for minority-serving
institutions, cuts funding for Hispanic-Serving Institutions (HSI) by 83%
and cuts funding for Historically-Black Colleges and Universities
(HBCU) by 36%. The Senate legislation does not cut funding for these
programs.

The House legislation eliminates the AmeriCorps program and other
national and community service programs. The Senate legislation
preserves all of these programs.

The House legislation eliminates the Fund for the Improvement of
Postsecondary Education (FIPSE) while the Senate legislation preserves
it.

Blocking New Program Integrity Regulations

The House legislation blocks several recent U.S. Department of Education
program integrity regulations, including the state authorization rule
and the new definition of credit hour.

The House legislation also blocks the gainful employment rules
concerning new programs and the data collection requirements for the
gainful employment rule. The latter will effectively prevent
implementation of the gainful employment rules starting in 2012, since
U.S. Department of Education can’t enforce the rules without data. The
gainful employment rules establish affordable debt restrictions on
most programs at for-profit colleges and on non-degree certificate
programs at public and non-profit colleges.

The Senate legislation does not block these regulations. Senator
Harkin has held a series of hearings that have been sharply critical
of for-profit colleges. He favors increased regulation of the
industry.